Securing the Supply Chain for Solar in India

FICCI Solar Energy Task Force Report on
Securing the Supply Chain for Solar in India
by
FICCI Subgroup on Securing Solar Supply Chain
Federation of Indian Chambers of Commerce and Industry (FICCI)
Environment, Climate Change, Renewable Energy
Federation House, 1 Tansen Marg, New Delhi 110001
T: +91-11-23738760 – 70
F: +91-11-23320714
E: renewables@ficci.com
W: www.ficci.com
rita.roychoudhury@ficci.com,
Industry’s Voice for Policy Change

by
FICCI Subgroup on Securing Solar Supply Chain

This paper is a result of work done by the members of the FICCI Solar Subgroup on Securing the
Supply Chain under the FICCI Solar Energy Task Force with feedback from other members of the Task
Force and industry stakeholders. This paper expresses the views of the industry on creation of an
effective supply chain in India for solar energy sector. No part of this publication may be reproduced
or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording
or any information storage and retrieval system, without prior permission in writing from FICCI. FICCI
will not accept any liability for loss arising from any use of this document or its content or otherwise
arising in connection herewith.
©All Rights are reserved.

Table of Contents
Foreword
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1. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Solar Supply Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
lOverview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
lKey Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
lKey Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4 Existing and Projected Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5 Benchmarking the Supply Chain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6 Securing the Supply Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7 Level Playing Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Power Tariff: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Low Cost Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SIPS subsidy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Priority Sector lending (Project Finance Loans) for Solar companies . . . . . . . 22
Technology Up-gradation schemes for Solar Manufacturers & Suppliers . . 22

8 Supply of Raw Material / Components - Solar Thermal . . . . . . . . . . . . . . . . . . . . . . . 25
9 Supply of Raw Material / Components - Solar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10 Solar Equipment Fabrication / Assembly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11 Balance of System - Solar Thermal and Solar Photovoltaic System . . . . . . . . . . . . 35
12 System Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13 General Requisites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Capex support for solar manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Integrated Solar Manufacturing Hubs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Power to Energy Intensive Segments of Solar Manufacturing. . . . . . . . . . . . . . 42
Tax & duty rationalization / exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Promoting cluster R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
16 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
PV
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15 About the FICCI Solar Energy Task Force. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Table 1: Solar Industry Supply chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Table 2. Demand in the solar PV value chain 2010-2022 . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 3: Existing and Projected requirement of equipment for . . . . . . . . . . . . . . . . . . . . 12
the development of solar farms and off-grid systems
Table 4: Existing and Projected requirements for PV manufacturing. . . . . . . . . . . . . . . 13
Table 5: Benchmarking of the present Indian supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
chain compared to global peers, in terms of quality /size and resultant cost
effectiveness
Table 6: Benchmarking of the present Indian and . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
global stakeholders for Balance of System (BOS)
Table 7: Capital requirement for manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(in Rs. Cr.), if the market requirement has to be met completely locally
Table 8: Total Market size (in Rs. Cr.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Table 9: Prioritizing Solar manufacturing support for Solar Thermal . . . . . . . . . . . . . . 43
Table 10: Prioritizing Solar manufacturing support for Solar Photovoltaic . . . . . . . . 44
List of Tables

Figure 1: Framework of Solar Energy Supply Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 2: Key Issues of Solar Energy Supply Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Figure 3: Module Production Cost of Tier 1 China C-Si Module: Existing and
Projection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Figure 4: Estimated Module Manufacturing Cost Comparison . . . . . . . . . . . . . . . . . . . . 30
Figure 5: Estimated Cell Manufacturing Cost Comparison . . . . . . . . . . . . . . . . . . . . . . . . 31
Figure 6: PV Cells Manufacturing Capacity Growth Across the Globe. . . . . . . . . . . . . . 31
Figure 7: PV Poly Ingots & Wafers Manufacturing Cost Comparison . . . . . . . . . . . . . . 32
List of Figures

Foreword
Solar Energy will have an important role to play in meeting India's energy security needs in
the coming years. The growing energy needs of India and the focus on clean energy has
created unique opportunities for the solar energy sector in India. India presents a huge
market for the growth and penetration of solar energy.
FICCI strongly believes that the creation of a strong and secure supply chain in India for the
solar sector will enable creation of jobs, reduce foreign exchange outflow and lead to
increase in investments and sustainable growth of the sector in the long run. There is a
strong need to incentivize investments in creating the domestic supply chain with help from
both domestic and global players, and to facilitate collaborative arrangements towards
enhancing research and development efforts. There is also a strong case for international
companies with extensive technology and experience globally to participate in building a
strong supply chain in India and be part of India's solar growth story.
This Report on Securing the Solar Supply Chain highlights demand opportunities and key
issues for the solar manufacturing supply chain and provides policy recommendations to
enable creation of a strong supply chain for solar energy in India.
This report reflects the views of players in the solar value chain and is a result of the
collaborative work of the FICCI Solar Energy Task Force after intensive discussions and
deliberations. I hope this Report will be useful for policymakers to evolve appropriate
mechanisms and help shape policy in this direction. I am sure the Report will also be a
valuable insight to stakeholders of the solar energy sector in India.
Dr. A Didar Singh
Secretary General
Federation of Indian Chambers of Commerce and Industry

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Energy self-sufficiency is a critical national objective. In case of solar energy, this
can be achieved without sacrificing on competitiveness through appropriate
global vision and strategic policy to support smart manufacturing and effective
supply chain creation.
India has a robust domestic demand opportunity. At the same time, the global
trade dynamics can create opportunities for Indian manufacturers.
With growing focus on green sources of energy in the country, solar
photovoltaic (PV) manufacturing in India is getting an impetus with easier
acceptance across potential users and this further leverages certain inherent
advantages such as:
o low cost of HR capital both white and blue collar
o Widespread penetration of smart manufacturing programs across
industry which eases capital investment, maximizes indigenization in a
phased, systematic manner with minimal technology obsolescence
exposure
Securing the supply-chain for solar
o Enables job creation (value addition increases upstream and deploys stable,
skilled workforce versus transient, low wage workforce)
o Reduces foreign exchange dependence - specially for PV based projects
substantial portion of total installed cost is directly or indirectly contributed
through imports which needs to be addressed in the context of the NSM key
objectives while also securing forex exposure to the extent possible with
1.Executive Summary

2
specific elements of the solar value chain/elements identified being locally
assembled/manufactured
o Eliminates risk associated with installations which have a high operating life
since the key suppliers being indigenous enforcement of obligations
contractually and legally becomes more effective vis-a-vis overseas
suppliers and specially from project lenders and investing entities point of
view prevents undermining of highly potential sunshine sector in India
This paper examines the sector providing
o Demand opportunity over the next 10 years across the supply chain
o Key issues
o Value-added analysis across key elements of the supply chain and makes
feasible recommendations for securing the supply chain.
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2. Background
Energy use is an important factor for the growth of a nation which in turn ensures
the socio-economic development of a country. Power plays an important role in
industrial, regional and overall societal development as it supports in employment,
knowledge and skills generation thereby creating long term sustainable growth.
India is taking proactive steps to sustain its rapid economic growth. The increasing
per capita income and large population moving into middle class has led to high
level of consumerism in India. In India, energy demand and supply gap has widened
over time as the demand has increased faster than the supply over time. India is in
need of sustainable energy solutions and amongst the various energy sources solar
energy can be considered as preferred option since it is available across
geographies, relatively unlimited vis-à-vis other green sources, freely available and
in fact the country is endowed with possibly the highest band of average annual
solar energy globally. In addition to grid connected solar energy generation and
solar thermal applications across industrial and commercial verticals, solar power is
also well suited for decentralized and distributed power requirements which can
assist in electrifying 400 million people with no access to electricity. Solar can play a
huge role in bridging the increasing peak load power gap and also base load
electricity demand which is expected to double by 2020.
Government of India announced the National Action Plan for Climate Change and
among the eight; one of the most important missions is the Jawaharlal Nehru
National Solar Mission (JNNSM). The JNNSM envisages a capacity addition of 20
GW of solar energy generation by 2022. After phase 1, it is estimated that the
remaining capacity under JNNSM will require an investment of more than USD 35
billion. The KPMG report "The Rising Sun" released in September 2012, suggests
that the cumulative solar capacity will be around 68 GW by 2022. This will
significantly multiply the requirement of foreign exchange. The role of solar energy

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in energy security, decentralized energy demand and subsequently the benefits of a
strong manufacturing base in the long term cannot be ignored. Keeping in view the
importance of a strong manufacturing base to cater to domestic requirement, one
of the key JNNSM objectives was to create a strong manufacturing base for solar
energy in India. This was created for employment generation and long term
sustainability of solar energy sector. The National Manufacturing Policy identifies
Solar Energy Sector as an industry with strategic significance along with Defence,
Aerospace and Telecom and classifies it as a "strategic industry" under the special
focus sectors.
Solar Sector is poised for intense growth. In India, however this industry is still at a
nascent stage though it has developed multifold over the last two decades
primarily with PV and lately with Solar Thermal. While the PV industry was catering
mainly to international markets, the local market was restricted to off-grid
applications and the solar thermal industry catered primarily to the domestic heat
requirements. However, since the last 2 years the demand in the domestic market
has grown multifold due to various central and state government initiatives which
have the potential to catalyze this industry enormously. However, the Indian
photovoltaic and solar thermal equipment industry is competing and facing
challenges with global players who have overcapacity, far lower interest costs and
higher incentives or subsidies as compared to Indian photovoltaic and thermal
equipment manufacturing units. As a result several solar equipment manufacturing
industries - in India and abroad- are either operating at sub-optimal capacity
and/or have shut down production.
A comparison revealed that the parameters for the low performance of Indian solar
manufacturing industry are as follows:
I. Big imbalance between installed capacity (production) and consumption
II. Perpetual disadvantage, as counterparts in other parts of Asia / world enjoy
following benefits:
Low cost of finance (varying from 0-10 % in most of the countries compared
to >14% in India)
Availability of ready finance for technology up-gradations / new installations
Availability of infrastructure and policy support from the government
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While domestic market was non-existent in China, it has managed to capture 60-
70% of the world solar market through favorable policy support offered by its
government. China has achieved this milestone through extensive financial support
with longer loan re-payment schedules, interest rate of 0-5% and creating other
favorable conditions.
On comparing with the domestic industry on the above mentioned criteria, the
Indian solar industry, in this evolving phase requires handholding to sustain in the
market. The Central and State level policies while delivering demand side incentives,
has failed to translate into coherent, consistent supply side policies, for most of the
Indian solar equipment manufacturers. In order to achieve JNNSM objectives, the
industry needs a level playing field where the government ensures a balance
between indigenous manufacturing capacity and imports.
A strong indigenous supply chain would lead to increase in investments, job
opportunity and sustainable growth of the sector. In some developed markets,
government extends additional budgetary support through better Feed in Tariff (FIT)
and other incentives for domestically procured systems. Taiwanese and Korean
governments took a position that the semi-conductor and solar industry were to be
made globally competitive and as a national strategy extended support. The
importance of having a well established and growing supply chain cannot be
ignored with the National Manufacturing Policy identifying it as an industry of
strategic significance reinforcing this fact.
It is appreciated that the short-term effect of improvements in supply chain security
may have certain implications for certain industry stakeholders, however, this paper
attempts to provide a pragmatic and rational approach with distinct phasing so as
to optimise this impact. This immediate term success is but imperative to ensure
that the medium-to long-term impact which is likely to be highly beneficial is
achieved. For long term sustainability and energy security, it is necessary to secure
the solar photovoltaic and solar thermal supply chain across the entire value chain.
In this paper, there is an attempt to identify the present status of the supply chain,
highlight issues and suggest strategic measures to ensure a sustainable, robust and
cost effective manufacturing base for the solar manufacturing industry in the
country with focus on employment generation, reducing foreign exchange outgo,
reducing climate change impact, and enhancing energy security.

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3. Solar Supply Chain
1. Overview
Secure, timely and cost effective supply of raw materials is the backbone of any
industry, it not only increases the efficiency of the production process but
rationalizes raw material inventory and finally overall product cost. The current solar
energy manufacturing base in India comprises primarily PV cell and module
manufacturing with 1100 MW of cells and 1800 MW of solar modules with very
limited and disparate fabrication and assembly capacities for solar thermal products
and accessories. By and large, Indian solar industry has been dependent on imports
of critical raw materials such as EVA, back-sheet, reflective glass, balance of system
(BOS) for Solar Thermal and PV as also core machinery. With regard to PV industry,
till recently, by and large it has exported major part of its finished products to
developed western markets. There is clearly tremendous scope for development of
domestic production base for some of the key inputs to secure and strengthen the
supply chain to reduce the foreign exchange outflow and create direct and indirect
long term employment in the solar industry.
The key elements in the solar energy supply chain framework consists of raw
material/component suppliers to solar photovoltaic module and solar thermal
system manufacturing, balance of system which includes inverters, connecting
wires, trackers etc. and the integration of the different components. It is important
to have different equipment and components integrated with proper specification
and compatibility, as in some cases even slight variation results in failure or loss of
final output.

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Figure 1: Framework of Solar Energy Supply Chain
2. Key Issues
The impact of changing economic scenarios has created demand-supply imbalance
with several Indian manufacturers operating at a sub-optimal capacity or having
shut down their production facilities. The Indian market which is evolving currently is
seen as one of the huge potential markets globally for solar and to that extent a
number of players from developed solar markets are making their presence felt here
steadily. This dimension of international entities presence in the country as also
impact of global trade dynamics needs to be effectively factored when deciding
local supply chain model creation. These global trade practices and developments
have resulted in bankruptcies, insolvencies and restructuring of quite a few solar
OEMs, manufacturers and supply chain entities. With the announcement of JNNSM,
many international companies diverted their resources towards India to take benefit
of emerging new solar market. These entities need to be encouraged to support the
setting up of facilities in the country with long term plans to invest in India. With the
right policy framework, this scenario can change thereby establishing a robust
Indian solar manufacturing sector and re-capitalizing the current players. Following
issues are analyzed and discussed in detail to define the priority areas in developing
an effective and strong supply chain for solar energy in the country.
Balance of System
B
Raw Material /
Components Integration
C
Photovoltaic Module
Manufacturing
A
Solar Thermal System

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3. Key Elements
The solar industry supply chain is primarily divided into two broad categories based
on the technology i.e. photovoltaic and solar thermal. The input requirements by
stakeholders in the value chain are elaborated against each one of them. The key
stakeholders are developers, manufacturers of cells, modules and solar thermal
equipment, raw materials suppliers and ecosystem entities for solar manufacturing.
The table below mentions the key elements required by the solar manufacturing
industry.
Figure 2: Key Issues of Solar Energy Supply Chain
lRaw material Supply
lTechnology sourcing/
development
lManufacturing Know-
how
lBest in class
equipment &
machinery
lSkilled man power
lStrong & ongoing R&D
lAppropriate standards
lQuality infrastructure
especially power
A B
C
lNetwork of system
integrators
lTraining and skill
development
infrastructure
lAccess to effective
sourcing alternates
lDevelopment of solar
specific SME suppliers
Sustainable Demand for
solar solutions
Financial Enablers
lCapex subsidy for
solar manufacturing
like SIPS
lAccelerated
depreciation benefits
lTax holidays
lSubsidized power for
manufacturing

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The above mentioned list is not exhaustive and mentions only key components of
the solar supply value chain based on the discussion with the key industry players.
Table 1: Solar Industry Supply chain
Supply Chain Solar Photovoltaic Sector Solar Thermal- Sector
(Without storage)
Primary Components (Developer view) PV Modules Reflectors
Thin Film Receiver Tubes
Inverters Vacuum Tubes
Trackers Solar Turbines
Manufacturing Value Chain PV Cells Reflector Coatings
(Manufacturers view) Silicon Wafers Absorber Coatings
Silicon Ingots
Poly-silicon
Supply chain Eco-system Low Iron Glass Reflector stands
Junction Box Solar mirror
Aluminum Frames Steam drum
EVA Receiver
Back-sheet Level controller
Silver Paste Level switch
Cutting Wires Pressure gauge
Graphite parts Pressure switch
Crucibles Valves
Silicon Carbide Piping
MG Silicon Pumps
Monosilane gas Tracking system
PLC
Infrastructure eco-system for solar Quality Power Solar Mfg Parks
Manufacturing Low cost power Policy support for
Solar Mfg Parks importing required
capital equipment
l l
l l
l l
l l
l l
l l
l
l
l l
l l
l l
l l
l l
l l
l l
l l
l l
l l
l l
l l
l
l l
l l
l

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4. Existing and Projected Requirements
The potential for solar, including grid and off-grid solar applications in India, for the
next 10 years is projected to be in the range of 35,000 - 60,000 MW. According to
the Rising Sun Report by KPMG, India will add 67,000 megawatts of solar
generation capacity by 2022, more than thrice the JNNSM target.
To meet this demand, it is vital to assess the requirements at various levels of supply
chain to select and strengthen the strategic links of the value chain based on their
advantages as per the Indian conditions. India should carefully prioritize parts of the
supply chain that it wishes to take a lead based on the strength of the Indian
economy. Even to achieve the objectives of the JNNSM, it is necessary to secure a
high quality and cost effective supply chain for the Indian solar industry else it will
put tremendous pressure on foreign exchange outflow and loss of employment
opportunities in future.

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Additionally, the international trade trends have created an opportunity for Indian
manufacturers to tap certain established solar markets as well. As appropriate trade
penalties and measures are implemented and global prices stabilize towards a sane
price structure with a demand balanced capacity, Indian manufacturers will start
getting a part of the global demand. In fact, because of the low cost of human
resource capital, the fact that several elements in the solar supply chain are not
technology intensive, India can leverage its domestic demand to have a self-
sufficient solar manufacturing ecosystem.
Table 2: Demand in the solar PV value chain 2010-2022
Units 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
NSM PV 140 350 10 750 650 800 600 1000 1500 1500 2000 2000
Demand
State PV 320 366 770 2500 1500 2000 1500 2000 2500 2500 3000 3000
Demand
Total PV MW/yr 460 716 780 3250 2150 2800 2100 3000 4000 4000 5000 5000
Installation
(On & Offgrid)
- 1 yr shift
Total PV MW/yr 25 435 716 780 3250 2150 2800 2100 3000 4000 4000 5000
Installation
(On & Offgrid)
- 1 yr shift
c-Si Market 60% 35% 55% 60% 65% 65% 65% 65% 65% 65% 65% 65%
Share
Module MW/yr 15.75 159.8625 413.49 491.4 2218.125 1467.375 1911 1433.25 2047.5 2730 2730 3412.5
Cell Demand MW/yr 17 168 434 516 2329 1541 2007 1505 2150 2867 2867 3583
Wafer MW/yr 17 176 456 542 2445 1618 2107 1580 2257 3010 3010 3762
Ingots MT/yr 122 1234 3191 3792 14673 9707 12641 9481 12416 16554 16554 20693
Polysilicon MT/yr 143 1451 3754 4462 17262 11420 14872 11154 14607 19475 19475 24344
(Assumptions: Aberration in batch 2 guidelines corrected by phase 2 NSM; 7 gm Poly-si/watt till 2015 & 5.5 gm Poly-si/wtt post 2018)
TF mkt share MW/yr 9 275 303 289 1032 683 889 667 953 1270 1270 1588
Comment
Gujarat
300 MW;
20 MW
Rajasthan
/misc
Guj 250
MW; Raj
40 MW;
Karnataka
10 MW; 50
MW misc
Guj
300MW;
Krntk 70
MW; Misc
400 MW
(MP/TN/
Orissa/U
P/others)
TN 490
MW; AP
1000 MW;
Raj 100
MW; Pun
300 MW;
UP 200
M; Bihar
150 MW;
MP/Karna
taka/Oriss
a/Misc
300 MW
NSM demand estimated basis
October declaration of PV
share of NSM II goals can go
up at expense of solar thermal
/ State solar demand kept at
NSM II goals - however,
indication are that this may
also go up given the strong
demand in year up… also
basis Rajasthan state solar
thermal response being nil-
current outlook has been that
the market for states will shift
totally to PV
Estimated Figures 17-22 are a likely scenario
bringing the total solar installed base by 2022 to an
installed capacity of 28GW solar PV and upto 7GW
Solar thermal; This period will also see the off-grid
solar applications take off and move to mainstream
markets as the projected solar efficiencies rise,
cost/watt drives down to grid parity and early
adapter success fuels the early majority of the
mainstream market - essentially, this is likely the
last major intervention by the government in
catalyzing the solar market as the tipping point
should be reached in this quarter
l
l
AssumeswateravailabilitywillconstrainSolarThermalplantgrowth,PVsharesfactoredintotalSolarasabove
State demand factored as a best case estimate as long run forecast not available unlike NSM. However, expect solar to expand across all states over
aperiodoftimegivingrisetoasustaineddemandatstatelevel,fuelledfurtherbytechnology/commercialbreakthroughstogridparity
(For supply-chain - we have assumed that the installation inputs are 1 year staggered before the end-user demand-realistic because timelines are for
completioninQ1,calendaryear)

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The current solar power manufacturing base in India comprises primarily solar
photovoltaic cell and module manufacturing with 1100 MW of Cells and 1800 MW
of solar modules. By and large, Indian solar industry has been dependent on
imports for most of the raw materials such as EVA, back-sheet, reflective glass,
balance of systems (BOS) and other equipment. The Indian products are of high
quality and reliability and the industry by and large has exported major part of its
finished products to US and European markets. Table 4 below shows estimates of
existing (2010) and projected requirements for the Indian solar photovoltaic
manufacturing industry.
Table 3: Existing and Projected requirement of equipment for the
development of solar farms and off-grid systems
Supply Chain Existing Quantities to meet Quantities to meet
Items capacities in India total domestic total domestic
(CY 2012) requirement at the requirement at
end of 3-4 years the end of
timeframe 5-10 years
PV Modules 1800 2,500-3,500 3,500-6,000
MW/year MW/year MW/year
Solar Inverters <100 MW /year 2,500-3,500 3,500-10,000
MW /year MW/year
Trackers 2.5-3.5 Million 25 Million
-Single axis (PV) NIL 50% 50%
-2 Axis for Thermal NIL 50% 50%
Solar Batteries Capacity meets 300-1000 >3,000-5,000
(For off-grid the demand; MW MW
applications) however, cost and
maintenance is
an issue
Reflector Glass NIL 11million sqm 53 million sqm in
in next 5 years next 10 years
Receiver Tubes NIL 0.9 million meters 4.4 million meters
in next 5 years in next 10 years
Solar Turbines NIL 30 numbers 150 numbers
of 50 MW each of 50 MW each
in next 5 years in next 10 years
Vacuum Tubes NIL To be estimated To be estimated

13
Based on the development potential, it is expected that during the next 10 years,
the Indian solar energy industry requirement will be growing at a healthy annual
rate of 30-40% or more. This growth rate throws up many challenges. Coordinated
efforts backed by a strategic policy support can help in the development of the
domestic supply chain. The solar manufacturing industry in India has the potential
to become a global scale industry in a very short time, similar to automobile
industry, if backed by a strategic approach.
Table 4: Existing and Projected requirements for PV manufacturing
Supply Chain Existing Quantities to meet Quantities to meet
Items capacities in India total domestic total domestic
(CY 2012) requirement at the requirement at the
end of 3-4 years end of 5-10 years
PV Cells 1100 MW installed 2,500-3,500 3,500-6,000
currently MW/year MW/year
Si Wafers NIL 1000-1250 million per year 2.4 Billion per yr
Si Ingots NIL 10-15,000 MT /year 15-20,000 MT/yr
Poly-silicon NIL 12-17,000 MT /year About 17-23000 MT/yr
Low Iron Glass 100 TPD 2,500-3,000 TPD 3,500-6,000 TPD
EVA Sheets NIL 20-30 Million sq.mtr 100 Million sq.mtr
Back-sheet NIL 10-15 Million sq.mtr 50 Million sq.mtr
Junction Boxes 2.5 Million 8 Million 10-40 Million
Al 100 MW 25-35,000 60,000
Frames-anodized equivalent MT/year MT/year
Silver Paste NIL 480 MT/year 600-2500 MT/year
Graphite NIL 800 2000
MT/Year MT/Year
Quartz Crucibles NIL 40,000 /year 60,000 - 2,00,000 /yr
Si Carbide slurry NIL 660 1000-33000
MT/year MT/yr
MG Silicon NIL 17,000 MT/yr 84,000 MT/yr
Reflective NIL 11 million sqm 53 million sqm
Coatings in next 5 years in next 10 years
Absorber NIL 0.2 million sqm 1 million sqm
Coatings in next 5 years in next 10 years
LED circuits/ Lamps Negligible To be estimated To be estimated

14
5. Benchmarking the Supply Chain
Phase 1 of the National Solar Mission specifically Batch 2 provides pertinent
insights with respect to the ecosystem and policy framework which will have to be
created for a sustainable and robust solar supply chain in the country. The existing
'on-ground' situation helps define various dimensions across technology, fiscal and
policy parameters which have to be addressed for developing strong local supply
base across the entire solar value chain.
In India, as is evident the nascent solar industry is beginning to take shape as part
of the government's national initiative of creating a robust renewable energy
ecosystem. The global solar market is now represented by Gigawatt scale plants
with high levels of local content both at machinery level and raw materials. In India,
there are only few 100 MW+ plants with high content of imported capital
machinery and raw materials. Based on the potential, it is expected that during the
next 10 years the Indian solar requirement will be growing at an annual rate of 30-
40% or more. This growth rate throws up many challenges for the supply chain. If a
well thought out and planned effort is undertaken, the solar manufacturing
industry in India can become a globally competitive industry in a very short time.
This will not only create jobs, knowledge and wealth but also over time make India
a net foreign exchange earner in the sector.
The benchmarking of the present Indian Solar Industry competitiveness as against
its global counterparts, in terms of quality /size and thereby cost effectiveness is
presented in Table 5 below. The comparisons and benchmarks stated in the table
are based on the individual project scenarios in India and not on SEZ, EOU based
scenarios.

15
Table 5: Benchmarking of the present Indian supply chain compared to global peers,
in terms of quality/size and resultant cost effectiveness
Capital Cost
Operational
Cost
Technology
Land & Infrastructure Availability at a competitive price is
a constraint. Development of
necessary infrastructure is
additional to the cost of the project.
Government allotted or at
subsidized rates with integrated
infrastructure provided
Parameters Chinese, Other Asian &
US Companies
Indian Companies
Parts & Machinery Partially available domestically,
largely imported, zero import duty
Majority local, tax set-offs are
available
Project Finance 13-15% interest loans,
comparatively shorter loan
durations, higher interest rate for
SMEs
0-5% per annum interest loans with
long tenures by government along
with grants. Example: Support by
US Exim Bank to US exports with
low cost financing
Raw Material (RM)
Cost
High as majority are imported Low as majority sourced locally
Utilities Higher prices (due to cross-
subsidization requirements)
Subsidized
Manpower Same Same
Interest Cost Around 12-14% 0-5 %
Machinery Mostly Imported Mix of local & imported
Upgradation High obsolescence; Slow up-
gradation due to non-availability of
capital
High obsolescence; Fast up-
gradation due to availability of
capital
R&D Lack of industry participation in the
R&D initiatives of the government
as they are vested with educational
institutions which are not aligned
with commercial requirements. Not
at commercial scale
Matured at commercial scale and is
vested in the hands of large
industries
Hence, the total project cost for Indian companies is higher around 15-20% than other countries.
Hence, the total operational/variable cost for Indian companies is higher (around 15-20%)
than other countries and in some cases 30-50% more where they are high in energy
intensity like Poly-silicon, Wafer production, etc.

16
Quality
Sourcing –
Raw
Material
Marketing
Strategy
Economies
of Scale
Standards Meets international standards – has
been exporting to European
markets
Meets international standards – but
quality of material being sent to
India needs to be suitably checked
from time to time & Extended
Producer Responsibility through a
domestic producer organization
ensured.
Parameters Chinese, Other Asian &
US Companies
Indian Companies
Inventory Cost High Low (JIT)
Lead Times
Supplier Options
High
Lesser
Low (across the fence)
Higher
Logistic System Poor infrastructure for both
domestic & export markets (Roads,
ports, clearances). High
transportation costs for raw material
and finished products.
Well established and low
transportation costs
Module Average size top 10 companies <
100 MWp
Average size of top 10 companies
+1,000 MWp
Cells: Capacity < 200 MWp >1,000 MWp
Si Wafers: Capacity 250MWp-1000 MWp (Planned) > 3,000 MWp
Si Ingots: Capacity 250MWp-1000 MWp (Planned) > 3,000 MWp
Polysilicon: Capacity 1,250 TPA (Planned) > 10,000 TPA
Bargaining Power Low due to low volumes High due to high volumes
Exim Benefits None Available with buyer's credit finance
mechanism
It is evident that India is competitive in terms of cost of labour and quality
standards but is at a disadvantage in terms of high cost of capital, higher power
tariff and absence of facilitating ecosystem.
The global module production capacity stood at 55.7 GW whereas in India it was a
mere 1.8 GW cumulative with insufficient demand for domestic products. These
capacities deter the Indian companies in terms of economies of scale. In fact India
has an opportunity to directly invest in latest technologies which can be sustained
by effective tapping of its domestic demand. The Indian solar manufacturers
though competent in terms of matching international quality standards face other

17
limitations such as poor infrastructure, lack of raw materials, an undeveloped supply
chain leading to high inventory cost and delivery time and lack of low cost finance.
These limitations have discouraged the development of the solar manufacturing
ecosystem - correct policies backed by a clear vision can create a successful, vibrant
Indian solar energy sector.
The need of a robust domestic manufacturing base lies on various factors such as
energy security and access, technology development, product standardization,
increase in foreign investment and decrease in foreign exchange outgo and talent
creation and employment generation.
Table 6: Benchmarking of the present Indian and
global stakeholders for Balance of System (BOS)
Products Parameters Indian Companies Chinese & Other
Asian Companies
Solar Inverters Range 1kw - 250 kw Above 500 kw
Efficiency 85- 98% > 96%
Microprocessor Recently introduced Well developed
Controllers
Manufacturing Problems with Continuous supply
Strategy sourcing of IGBTs through local sourcing
Trackers Single Axis Lack of proven Reliable mechanism
(PV) solutions
Double Axis Lack of proven Highly accurate
(Thermal) solutions mechanism
Solar Batteries Battery Life Around three years > 3 years
(For off-grid
application) Recycling Options available
Low Iron Glass Transmission Factor 91.6% 91.6%
Plant Capacities 250 TPD > 2,000 TPD
Junction Boxes Certification International International
Balance of system plays an important role in a solar power project as it is one of the
most important and fragile parts of a solar energy project. Experience shows that
project failures due to improper selection of BOS are high in comparison to any
other system and to that extent quality, compatibility and robustness of BOS
elements is imperative.

18
6. Securing the Supply Chain
Supply Chain is a key factor for the development of an effective, low cost and a
secure manufacturing base. Entire list of components and raw materials cannot be
produced locally as perhaps in globally competitive ecosystems but a strategic
assessment and selection based on requirements and strength at various levels of
supply chain should be developed. These should then be linked through various
policies based on their advantages as per Indian conditions. It is the need of the
hour that the country should carefully select and prioritize the parts of the supply
chain in solar photovoltaic and solar thermal technology that it wishes to take a
lead based on the requirement and long term goals of the Indian economy.
For long term sustainability of a secure solar supply chain, the following points
need to be addressed immediately:
1) Strategic positioning of Domestic Ecosystem: With the bigger objective of
meeting energy security for the country a steady and thought out phased plan
for indigenization of prioritized elements of the value chain is imperative. A
structured approach will enable the Indian manufacturing industry to become
competitive domestically as well as globally.
2) Foreign Exchange outgo: Presently, most of the solar supply chain materials
are imported, causing a great pressure on our foreign exchange. Conservative
estimates show that directly and indirectly more than half of project cost
incurred on every MW of installation of solar PV power plant in India results in
foreign exchange outflow, due to the absence of solar value chain
manufacturing in India. This calls for a complete rethinking on the development
of indigenous ecosystem for solar manufacturing. We have the ability to turn
India into a solar capital of the world. If we look at just 20% value-add across
the solar value chain (including depreciation and human resources capital cost,
accounting for total cost of capital) - there is a national case for investing in a
domestic industry now to reap full benefit within the next plan period- and
subsequently.

19
3) Loss of employment opportunities: Indian solar PV manufacturing industry
has close to Rs 10,000 crore invested and provides jobs to more than 25,000
employees with total installed capacity of 1100 MW of cells and 1800 MW of
modules. It is estimated that if the entire solar value chain is manufactured in
India, then the potential to support employment is close to 2 lakh persons.
4) Global scale plants: As we can see above, the global market is now represented
by gigawatt scale plants, while in India we have only 100 MW+ plants. These
huge capacities deter the Indian companies in terms of economies of scale and
the bargaining power for sourcing and marketing. However, in a smart
manufacturing program, right sizing the capacity can turn to advantage by
preventing higher capital costs, better plant utilization and increased technology
up-gradation and maneuverability.
5) Technology Up-gradation: The solar manufacturing industry is very rapidly
adopting new technologies and innovating to achieve higher efficiencies and
lower costs. There are important learning and insights from phase 1 of JNNSM
which can be properly analyzed and necessary corrective actions initiated. A
one-time intervention to build capacity and upgrade the solar sector is
recommended. Given the huge capacities of sub-optimal technology across the
globe and poor financials of most of the global players, there is a unique
opportunity for India to leap frog technology and build a right-to-win position in
the sector.
Keeping in mind the above issues, attempt is made in this paper to work out
parameters for the development of the domestic manufacturing ecosystem, without
affecting solar project development. Following points need to be addressed to
ensure that the targets are met effectively and proliferation of solar based solutions
achieved as envisaged in the National Solar Mission.
1) Level playing challenges - Solar Manufacturing value chain
2) Supply of Raw Material / Components - Thermal Solar
3) Supply of Raw Material / Components - PV Solar
4) Manufacturing Equipment - PV Solar / Thermal Solar
5) Manufacturing of Balance of Systems (BOS) - PV Solar / Thermal Solar
6) System Integration - PV Solar / Thermal Solar
7) General

20
7. Level Playing Challenges
1. Power Tariff:
Issue: Availability of low cost reliable and quality power is a major factor for
manufacturing of photovoltaic value chain (Poly-silicon, Ingots & Wafers, PV
Cells) as 25 - 30% of the total manufacturing cost is power cost and its impact is
close to 40-50% of the variable cost (Poly-silicon manufacturing). Majority of
the global players in Asia, Europe and US are supported by their respective
governments with low cost quality and reliable power, at a tariff equivalent of
US Cents 7-11/kWh (equals to Rs. 4.00 - Rs. 6.00 /kWh).
Possible Approach:
1. Central government to recommend to state governments and the State
Energy Regulatory Commissions (SERCs) where the solar manufacturing
industry including Poly-silicon-Ingots and wafer plants are coming up, for
special arrangements for lower tariffs (at about Rs. 4 - 6.00 / kWh) for an
initial period of 5 years of start of the manufacturing. However, it is to be
noted that predictability and continuity of power is just as important to the
final production cost. The costly fossil fuel based DG sets are not an
alternative for a viable production unit.
2. Alternately, additional allocation of solar farm capacity; or higher feed-in-
tariff for higher domestic content in the solar farms (Domestic content may
be made a basis for tariff allocation as is done in Canada and France).
3. To meet the power requirement of solar energy industry, captive power
plants (from private sector or on PPP basis) should be promoted with
exemption of wheeling and cross subsidy charges, and allocation of coal
blocks on priority basis.

21
2. Low Cost Financing
Issue: Availability of low cost financing to the manufacturing industries of the
solar value chain is important, as the finance cost is in the range of 15-25% of
the manufacturing cost. The industries in China, Europe and US enjoy interest
rates which are much lower than what Indian industries have to bear.
Possible Approach: For encouraging production of raw material for the solar
energy industry, schemes for low interest rates and long term loans should be
introduced. MNRE has introduced an interest subsidy program for Poly-silicon,
Si-Ingots and Wafer industries in the past, but this program was not active due
to lack of budgetary support. Now that there are many projects which are taking
shape in this domain, it is of paramount importance to re-activate similar
schemes for solar photovoltaic and solar thermal sectors.
Investments going to solar manufacturing should also be given accelerated
depreciation benefit as given to the solar power plants .This will lower the
burden of high depreciation cost burden of this high capital intensive
manufacturing sector where the Asset Turnover Ratios are as low as 0.35 - 0.5.
3. SIPS subsidy
Issues: (i) The Special Incentive Package Scheme (SIPS) capital expenditure
(capex) subsidy program invited applications in 2008, but the final approvals are
yet to be accorded.
(ii) The threshold limit of Rs 1,000 crores is to be calculated with the year of
disbursement as the base year, rather than the year of application.
Possible Approach: Ministry of Communication and Information Technology
(MoCIT) needs to approve the projects at the earliest with 2011-12 as the base
year. The SIPS incentives should be made available for the ecosystem industry
with threshold limits reduced to the level of SMEs as most of them fall under
that class.
MoCIT should consider (a) prioritized settlement of 2008 SIPS payout to inject

22
liquidity into the sector and (b) addressing the modified SIPS policy but with the
requirement that enough traction from potential manufacturing entities is
created so that objective of the policy is fully achieved.
4. Priority Sector lending (Project Finance Loans) for solar
companies
Issue: Funding for solar manufacturing and project development should be
accorded priority sector status to facilitate access to bank finances.
Possible Approach: Keeping in view the energy securitization and its high
socio-economic and environmental benefits, Solar Energy sector should be
accorded Priority Sector status and funds may be allocated to manufacturing
industries in this sector. Possibility and approach for public sector funds like
those with IREDA wherein dollar lines of credits are available, need to be
evaluated so that the manufacturing sector can access these easily.
5. Technology Up-gradation Schemes for Solar
Manufacturers & Suppliers
Issue: The Solar manufacturing processes are undergoing rapid changes to
achieve higher efficiencies and lower costs. At present, falling prices, higher
efficiencies, outdated machineries, imports, new materials and economic
slowdown have created a challenge for the industry. To meet these challenges
and take advantage of the new technologies or raw materials, the
manufacturing industry needs to upgrade its facilities.
Possible Approach: A solar industry technology roadmap needs to be defined
and agreed upon between the industry, technical innovation bodies, and the
government. This will focus energies and enable the industry to synchronize up-
gradation plans with demand.
Up-gradation support to the Indian Solar Energy Manufacturing industry would
result in sustained growth and enormous benefits to the country. Upgradation
of both the process of manufacture and corresponding plant and machinery is

23
necessary for the industry to improve the efficiency, reduce the cost of
production and remain price competitive at a time when cheaper products are
easily available in the global market.
A technology up-gradation scheme for solar energy sector should be introduced
where induction of the state-of-the-art or near-state-of-the art technology
should be promoted. But in the widely varying mosaic of technology adopted
by the industry, atleast a significant step up from the present technology level to
a substantially higher one would be essential. Accordingly, technology levels
should be benchmarked in terms of specified machinery for each sector of the
solar industry. Machinery with technology levels lower than that specified
should not be permitted for funding.
Various ministries at the central and state level have introduced schemes to
support their industries. Some of the schemes are mentioned below in brief:
1. The Ministry of Small Scale Industry introduced a scheme in 2006 for the Small
Scale Industry where in it provided a 15% upfront capital subsidy to a maximum
1
of Rs 1 Crore.
2. Ministry of Textile has Technology Up-gradation Fund (TUF) Scheme. This
Scheme was restructured and was valid till March 2012. The scheme has been
widely successful and has released 11,196 Crores in last 11 years and has
2
attracted an investment of 2.03 lakh crores.
3
3. States like Gujarat , Rajasthan and Maharashtra provide technology up-
gradation support to various sectors to improve their efficiency, quality and
production.
Incentive package or viability gap funding to upgrade the facilities or for
substitution of costly raw materials with cost effective raw materials needs to be
introduced. Technology up-gradation for improving efficiency, productivity
1
2
3
http://dcmsme.gov.in/schemes/sccredit.htm
http://www.texprocil.org/doc/GR_on_restructured_TUFS.pdf
http://www.imd-gujarat.gov.in/plan05-06/large-index.html

24
enhancement for gaining global competitiveness and thus attracting new
investments alongwith employment should be the broad objective of this
scheme. There are similar policies which are already operational for other
sectors at the central as well as state levels.
Some of the possible options for facilitating technology up-gradation are
mentioned below:
1. A one-time technology up-gradation scheme through the National Clean
Energy Fund (NCEF) should be created to support the solar energy industry for
technological up-gradation for improving efficiency, productivity enhancement
and attracting new investments. The funding should be provided once in five
years with a maximum cap of 30% subject to a maximum of Rs 5 Crore.
2. The survival and growth of the Indian solar manufacturing sector is critically
dependent on its modernisation and technological up-gradation. A credit
linked capital subsidy scheme similar to Ministry of Small Scale Industry
scheme or Ministry of Textile Scheme, as mentioned above should be
introduced at a larger scale for this green energy sector. The scheme should aim
at facilitating technology up-gradation by providing upfront capital subsidy to
the tune of 40% to the Indian solar manufacturing sector.

25
8. Supply of Raw Material /
Components – Solar Thermal
a) Reflector
Issue: Presently most of the thermal systems use primarily mirror and coated
aluminum based reflector in certain cases. While availability is not a major issue
as of now, costs are very high since requirement is presently being met through
imports. Further, Indian projects do not have economies of scale which are seen
in other mature solar markets.
Possible Approach: Waiver of duties and taxes on such imports is one of the
near term requirements to rationalize input costs for users, however, immediate
steps need to be taken by the government to encourage a couple of already
established mirror manufacturers in the country (Indian & MNCs) to set up solar
mirror line to service the growing local demand in the country. Such investments
will need to be backed by a strong incentive package since project viability is not
expected to be achieved in the two to three years time frame expected out of
such capex investments by most companies. Small and medium enterprises
could also be promoted with suitable financial packages to take put up
mirroring and cutting processes as concurrent initiatives.
b) Reflector Coating
Issue: Availability of effective reflector coating.
Possible Approach: There is a need to develop appropriate reflector coating by
which there would be a possibility of using the substrate itself as a reflector. This
needs to be done indigenously to ensure capability building as well as ensure
lower costs. Research institutions and industry collaboration initiative for such
developments is an imperative and this needs to be aggressively encouraged.

26
c) Receiver Tubes
Issue: Mirror finish receiver tubes used in line focusing concentrators are
required to be imported presently in the absence of suitable alternatives
available in the country.
Possible Approach: There are two approaches which can be promoted. The
first is to have indigenous manufacturing based on technology collaboration.
Second approach could be to have focused research between Indian academia
and interested companies leading to creation of commercially viable products
and their manufacturing value chain.
d) Absorber Coating
Issue: Presently appropriate facilities for developing absorber coating are not
available in the country.
Possible Approach: The same has to be promoted and developed to meet the
growing demand expected in the coming years, while doing so specific focus
should be given on handling increased lengths of absorber tubes. Absence of
critical mass in the initial period requires government facilitation or
encouragement to an existing PSU to take up this manufacturing. Simultaneous
approach of bringing in the best technology and developing indigenous
facilities requires to be pursued.
e) Vacuum tube availability
Issue: Availability of vacuum tubes which is a key component of solar thermal
installations is a major issue presently.
Possible Approach: There are a limited number of international suppliers for
these products presently. R&D funding from government for development of a
comparable product is crucial and this will necessarily entail engagement with
international experts and institutions with domain expertise in relevant areas.
Cost reduction and availability would be the key targets for such development.
Indigenous manufacturing option will be necessary post the above.

27
f) Glass to Mirror
Issue: Lack of domestic mirroring and mirror cutting facilities for solar grade
mirrors.
Possible Approach: Mirroring and mirror cutting facilities should be developed
within the country to reduce dependence on external suppliers. This needs to be
addressed on a priority basis as availability of solar grade mirrors could become
a major hindrance in proliferation of solar installations in the country. It would
be pertinent to develop 3 to 4 facilities for mirroring and mirror cutting of solar
grade mirrors in the country.
g) Heat Transfer Fluid / Heat Storage System
Issue: Lack of domestic heat transfer fluid suppliers.
Possible Approach: The heat transfer fluid forms a major cost in the capex and
is an important component for the performance of the plant. The present
market is controlled by few players. It would be of importance to develop
domestic manufacturers who have petrochemical facilities in India to produce
such fluids at affordable prices through R&D and technology transfer routes.
The heat storage system is vital for the improvement in CUF of the solar thermal
plant that can ultimately replace certain base load conventional power plants.
The molten salts are currently not available in India and the heat storage design
is also held by few people. It is imperative to develop this indigenously for the
solar thermal industry to thrive.

28
Table 7: Capital requirement for manufacturing (in Rs. Cr.)
if the market requirement has to be met completely locally
Mfg Capex (Rs. Cr.) Up to 2013 Up to 2017 Up to 2022
Collector 982.36 2,947.08 14,628.96
Receiver tube 3.11 9.32 45.48
Receiver Surface 2.67 8.01 39.71
Total 988 2,964 14,714
2
Note: Critical manufacturing capacity for collectors is 1,50,000 - 2,00,000 m per annum
Table 8: Total Market size (in Rs. Cr.)
Mfg Capex (Rs. Cr.) Up to 2013 Up to 2017 Up to 2022
Power 1650 4500 20250
Cooling & Heating 67.5 180.7 232.8
Total 1718 4681 20,483

29
9. Supply of Raw Material /
Components - Solar PV
a) Module BOM
Issue: Presently, in module manufacturing, 90% value of materials is imported.
The goal of the National Solar Mission for local component will be truly
achieved only when the materials like EVA, Back-sheet, Junction Box, Low Iron
tempered Glass, Aluminum Frame are available indigenously with competitive
quality and cost advantage. Import of these materials is an impediment for the
growth of the module manufacturing industry in India as this makes local
module costing highly unattractive compared to that from other Chinese and
other Asian countries. To ensure material offered from Asian countries meets
pre-defined standards and specifications which will ensure that user/developer
does not land up with non-performing or low-performing assets, it is crucial that
plan for standards to enable control on quality is established.
lc-Si Tier 1 Chinese firms still have the lowest cost profile in the industry. This is due to their ability to achieve low cost conversions steps
through the manufacturing process as well as having lower silicon costs using a mix of high and low purity silicon
lAny upturn in polysilicon prices could have an impact on module production cost (and profitability) because non-silicon cost
improvements are becoming harder to achieve.
PV Manufacturing Costs
Module Production
Cost Q1’12
Module Production
Cost Q1’13
Module Production
Cost Q1’14
Manufacturing Cost Total:
$0.82/W
$0.56/W
$0.53/W
Silicon
Cost,
0.20
Cell
Convers
ion, 0.15
Wafers
Convers
ion, 0.17
Module
Convers
ion, 0.20
Silicon
Cost,
0.12
Wafers
Convers
ion, 0.12Cell
Convers
ion, 0.12
Silicon
Cost,
0.12
Module
Convers
ion, 0.19
Cell
Convers
ion, 0.11
Wafers
Convers
ion, 0.11
Module
Convers
ion, 0.30
Production Cost: Tier 1 China c-Si Module
Figure 3: Module Production Cost of Tier 1 China C-Si Module: Existing and Projection

30
Figure 4: Estimated Module Manufacturing Cost Comparison
India
Chinese and other Asian
Countries
28
22
2
1.5
1.75
1.25
2
1.5
0.751
Balance of Material (Incl Duties & Tax)
Utility & Spares
Manpower
Interest (Incl WC)
Depreciation
34 Cents/Wp
27 Cents/Wp
Possible Approach: Government can identify strategic partner industries within
India for each of the above materials and encourage them through R&D
incentives, process up-gradation schemes, etc.
Technology transfer and tie-ups with EU or USA based industries should be
supported through dialogues with their governments.
This industry is ideal for a small and medium enterprise (SME) set up. The
investment benefits like SIPS should be developed for this segment also.
b) Cell Manufacturing
Issue: (i) Similar to module manufacturing, PV cell manufacturing is also
dependent on nearly 100% imports of all the raw materials and gases.
(ii) Substituting costly raw materials with alternate raw materials. Dependence
on imports has resulted in a significantly high cost at cell level for Indian
manufacturers as compared to the competition from Chinese and other Asian
countries.

31
India
Countries
12
15
4
1
5
3
3
1
1
2
Balance of Material (Incl Duties & Tax)
Utility & Spares
Manpower
Interest (Incl WC)
Depreciation
Figure 5: Estimated Cell Manufacturing Cost Comparison
Possible Approach: Government can identify strategic partner industries within
India for each of these materials mentioned above and encourage them through
R&D incentives, process up-gradation schemes, etc.
Figure 6: PV Cells Manufacturing Capacity Growth across the Globe
India
Spain
Philippines
South Korea
USA
Malaysia
Japan
Germany
Taiwan
China
CumulativeManufacturing
Capacity(MW)
100%
80%
60%
40%
20%
0%
2005 2006 2007 2008 2009 2010
28 Cents/Wp
19 Cents/Wp

32
As is evident from the above mentioned statistics, capacity addition in India has
been stagnant over past few years, with China and Taiwan accounting for 59% of
the cell manufacturing capacity in 2010.
c) Wafer Manufacturing
Issue: Processing of waste slurries.
Possible Approach: Encouragement to licensors / technology providers to
install common facilities is needed.
Figure 7: PV Poly Ingots & Wafers Manufacturing Cost Comparison
Raw Material and Consumables
(Incl Duties & Tax)
Utility & Spares
Manpower
Interest (Incl WC)
Depreciation
India
Countries
20
6
1
8
5
18
4
1
3
4
30 Cents/Wp
40 Cents/Wp

33
10. Solar Equipment Fabrication /
Assembly
a) Tracking System
Issue: Presently the tracking systems being developed are done using
universally available components.
Possible Approach: To ensure efficient solar based systems are developed at
competitive costs, development of efficient tracking systems is the need of the
hour. There should be a focus on developing dedicated tracking systems and
related components for solar applications which will help in driving the costs
down.
b) Solar Manufacturing Hubs
Issue: Need for creating solar manufacturing hubs in India.
Possible Approach: Promotion of Solar manufacturing hubs for solar thermal
and PV is an effective mechanism to ensure high grade ecosystem with all
necessary infrastructure and utilities essential for such solar manufacturing
being made available. Such investments could be encouraged with attractive
fiscal benefits to investors. There is sufficient number of case studies in other
industries such as auto-ancillary, pharmaceuticals and leather which can be
suitably adopted. Locally existing fabrication capacity should be leveraged to
ensure quick capacity buildup. Special zones for solar would help India to service
global requirements. In case of solar thermal, with proper regulatory and fiscal
support, entire equipment value chain can be indigenously owned thus
promoting and ensuring capability and capacity build-up.
(Manufacturing requirements, Technology Sourcing / Development)

34
c) Equipment & Machinery
Issue: Absence of manufacturers for high capital intensive equipment and
machinery in India.
Possible Approach: While solar manufacturing is highly capital intensive, major
portion of the investment is towards equipment and machinery. There has been
a huge capacity built in European countries in the past for solar. The idle
capacity of this installed base could be assessed to analyze if there could be a
possibility of using capital equipment presently unused in these countries.
Appropriate fiscal and trade incentives and exemptions should be considered to
encourage and support such equipment import with clear caveats on
productivity and performance of such machineries.

35
11 Balance of System - Solar Thermal
and Solar Photovoltaic System
a Solar Turbines
Issue: Presently there are only few international vendors for solar turbines.
Possible Approach: If the CSP proliferation plans of the government have to be
made effective, there have to be other alternatives including possibility of
supporting indigenous developments and manufacturing over a period of time
without compromising quality and performance standards.
b Inverters
Issue: The Inverter manufacturers in India have huge manufacturing capacities.
One estimate is that there is an average of 4 million inverters sold per year. With
an average capacity of 800 W, this amounts to 3200 MW of non-solar inverters
being manufactured every year in India. Though traditional inverters cannot be
directly compared with more sophisticated solar PV inverters, with right
technology backing, the Indian manufacturers will be able to easily augment
their capacity to meet the PV inverter requirement under the JNNSM.
There is also a need to customize the PV inverter for Indian conditions. India's
utility grid (especially Low Voltage grid) is known to be unstable. If we go with
the international PV standards, then the PV inverter cuts off the power when the
grid voltage goes below 207V or above 264V. This will result in a sub-optimal
usage of solar PV system. Hence, the solar PV inverters and standards will have
1
to be "adapted" for Indian conditions for optimal use.
Component shortage was a key issue in PV Inverter manufacturing with the new
manufacturing capacities being set up by global majors and Indian companies in

36
this domain. The same is being mitigated to a large extent. Key components
such as Insulated Gate Bipolar Transistor (IGBT) modules, Digital Signal
Processor (DSP) based controllers are still imported.
c Batteries
Issue: Sustainable and consistent availability of quality inverters and deep
discharge needs to be ensured. There is high dependence on imports.
Possible Approach: Rationalization of existing duty structure for near term on
both these components when used for solar applications could be considered.
Feasibility of local manufacturing and sourcing for these items should be
evaluated and necessary incentive package to promote expansion of capacity by
existing players and setting up of new projects by international as well local
players should be ensured.
d Capability Development
Small and Medium Enterprises will require capacity and capability
enhancements in the areas like fabrication, section bending, glass bending,
surface coating, selective coating and mirror bending tending toward higher
degree of automation. There is a reasonable cost arbitrage benefit estimated for
manufacturing in India which can be leveraged effectively. The country has a
potential base for meeting global requirements in addition to meeting domestic
demand, however, to ensure the same, appropriate incentives should be
provided to these enterprises to encourage them towards building capabilities
pertaining to solar.
1
Indian Semiconductor Association report, 2010

37
12. System Integration
Network of System Integrators
As industry matures, different parts of the value chain and the system integration
will also evolve. There should be a focus on developing a network of system
integrators to meet the local demand.
Possible Approach: We must ensure that appropriate quality checks are in place to
qualify such integrators. There can be regular audits of such entities from time to
time to ensure that they maintain the required quality standards. To strengthen
system integration, schemes similar to Channel Partner scheme should also be
initiated for system integrators.
Successful development of the off-grid opportunity will require a large scale, low
cost workforce for the site integration of the solar PV systems. It is recommended
that an off-grid PV integration program be launched through NSDC to target 10,000
electricians/integrators in 50 targeted solar cities of the 12th plan.

38
13. General Requisites
a. Availability of Skilled Manpower
Issue: With solar landscape evolving at a fast pace in the country, one of the key
challenges would be to ensure that the required talent pool is made available
for the industry to grow. There are more than 10,000 technicians/ITI personnel
and 1000 engineers required in order to realize the targets mentioned. While
there are few colleges/institutes in India offering courses in energy engineering
and specialized renewable energy courses related to solar, there are even lesser
number of options available for creating the operating level technical talent
pool. Further, appropriate faculties are not available, leading to ineffective and
non-pragmatic courses.
Possible Approach: The existing government initiative of including and
promoting solar related programs at various levels needs to be accelerated so
as to have a suitable engineering base for the growing solar industry. This
concerted action plan needs to have an optimal mix of participation between
industry, academic institutions and research institutes for meeting training and
manpower requirements which needs to be addressed immediately. Industry
engagement is pertinent to have an effective roadmap developed which is
currently missing. Technicians and operator training and certification programs
need to be conceptualized centrally and rolled out in a structured manner
ensuring minimum quality standards w.r.t training infrastructure, faculty and
qualifying criteria.
IBR adherence is a major qualifying criterion for solar thermal installations
delivering steam, thereby creating a need for certified Solar Thermal Operators.
Necessary augmentation of available resources in the country with this domain

39
expertise is a pre-requisite and a suitable program to ensure this in tandem with
Central Boiler Board needs to be pursued by MNRE.
b. Strong and Ongoing R&D
Focused effort on research and development should be initiated at various
institutes like the IITs along with involvement from the industry while ensuring
minimum overlaps so as to utilize limited resources effectively. The
developments so made should be supported by the industry with live cases to
test the viability and performance of any such research. Working with
international entities and experts in specific domains through government-to-
government engagement programs should be leveraged.
Cluster R&D for cells in solar PV value chain and local alternatives development
for solar thermal value chain (reflectors, coatings, vacuum tubes, turbines)
should be facilitated for near-term commercial applications.
c. Appropriate Standards
Manufacturing and performance standards for the solar industry are a necessity
and the relevant government bodies including BIS and MNRE have to take the
lead in developing the same. Mandatory compliance to such standards for solar
equipment in the country also needs to be put in place in a phased manner.
Apart from the above mentioned issues, the government should take the lead in
making available accurate radiation data for the OEMs. This will go a long way in
predicting performance of new solar installations with reasonable level of
accuracy and building confidence with the user segments due to lesser deviation
between actual and projected output.

40
14. Recommendations
To ensure a sustainable, robust and cost effective manufacturing base for the solar
manufacturing industry in the country, a 5-point agenda is recommended which
would be crucial for creating domestic manufacturing base for the solar supply
chain and priortising those elements of the value chain that are relevant in the
present Indian context to meet the domestic demand in the next few years.
1. Capex support for solar manufacturing
The estimated requirement of funds in the near term for solar thermal and PV
by 2013 is Rs 395 Crore and Rs 2000 Crore, respectively. The midterm (upto
2017) and long term (upto 2022) requirement for solar thermal is Rs 1186 Crore
and Rs 5886 Crore, respectively, and Rs 12000 Crore and Rs 16000 Crore for
solar photovoltaic. National Manufacturing Policy has identified solar as one of
the sectors of strategic importance. Sectors of strategic significance should be
given special thrust in terms of capex support.
a. Capex support policy:
1. For encouraging production of raw material for the solar PV and thermal
industry, schemes for low interest rates and long term loans should be
introduced.
2. Encouragement for integrated plants in solar hubs, as they are self-
sufficient.
3. A one-time technology up-gradation scheme through the National Clean
Energy Fund (NCEF) should be created to support the solar energy
industry for technological up-gradation for improving cell efficiency and
production enhancement.

41
b. Low cost funding to be extended to PV and solar thermal towards for
meeting capex requirement for entire value chain (including components
and machinery)
1. Viability gap funding for new technologies up to 40%.
2. Low interest finance to be made available to ensure a level playing field
(0-5%).
2. Integrated Solar Manufacturing Hubs
Integrated Solar Manufacturing Hubs will create a cohesive ecosystem for solar
related manufacturing encompassing all elements of the solar value chain,
supported by complete infrastructure availability such as availability of reliable
and quality power, transport connectivity, waste treatment facilities etc. This will
support in creating a secure supply chain and also optimize the costs by
ensuring common utilities and economies of scale.
a. Central and State governments should provide capital subsidy / tax
exemptions for development of common Infrastructure in such Integrated
Solar Manufacturing Hubs.
b. Multi - Unit concept with one or two anchor industries at a location.
c. Location preferences based on the end market.
d. MNRE should ensure that projects that come for clearance from Department
of Industrial Planning & Promotion (DIPP) under the National Manufacturing
Policy (NMP) must be aligned with the objectives and deliverables of the
National Solar Mission.
e. Waiver on environmental clearance at the central level applicable to solar
manufacturing facilities under Environmental Impact Assessment (EIA)
notification should also be applicable for solar hubs.

42
3. Power to Energy Intensive Segments of Solar
Manufacturing
Cost of power constitutes major input cost for MG Silicon, Poly-silicon, Wafer
manufacturing, etc. The government should consider lower power tariffs for this
green energy sector at par with the global competition (Rs. 0.9 to 1.1 / kWh) for
this strategically significant emerging sector which will help in making it cost
competitive.
a. There is a need to extend concessional power for energy intensive segments
of the PV value chain as the percentage share of power in the cost of
manufacturing of these raw materials is significant. The estimated
percentage share of power for the manufacturing of raw materials are 50%,
30%, 25% and 10% for MG silicon, poly-silicon, Crystal Growing Ingots and
Wafers, respectively.
b. The State Governments and State Electricity Regulatory Commissions should
provide special category tariffs (approximately Rs. 4-6 per unit) at par with
1
global competition .
4. Tax & duty rationalization / exemption
There is an urgent need to rationalize taxes and duties on the solar thermal and
solar photovoltaic value chain to make Indian solar manufacturing industry
competitive and to bring down cost of solar power. The inverted duty structure
for the solar photovoltaic sector is a matter of grave concern for the
sustainability of the Indian solar energy sector.
While certain capacities should be developed through promotion of local
manufacturing, there will be specific components which will have to be
imported in near future, as developing capacities would take some time. Tax
and duty rationalization of these components should be given priority. The
break-up of these components under Thermal and PV for domestic capacity
creation and duty rationalization is shown in tables 9 and 10 below.
1
* LDK, Daqo, Waker, Tokuyama – Recent Annual Reports / Analyst Reports

43
The tax and duty concerns and concessions required for the manufacturing
industry are as follows:
a. Current tax and duty structure regime translates up to 23% taxes and duties
on imported machinery (except for SEZs and EOUs). Same needs to be
exempted to facilitate quick capacity build-up in the country to cater to
domestic market.
b. Duty structure applicable to select components as mentioned in table 10
below, where domestic manufacturing could have a strategic advantage
needs to be rationalized with a sunset clause. The inverted duty structure on
components adds up to between 10% and 20% currently.
c. States have imposed Central Sales Tax, VAT to the tune of 5% against sales of
Solar PV cells/Solar PV modules, Solar SPV systems, Solar Collectors, Solar
Water Heating Systems and various other systems running and operating on
Solar Energy. While this is not applicable for imports, it makes the
domestically manufactured products further uncompetitive. The VAT and
Central Sales Tax on these items should be permanently removed to
promote manufacturing and sale of solar energy products as these are Green
and Clean Energy products.
Table 9: Prioritizing Solar manufacturing support for Solar Thermal
Details Domestic Capacity Creation Duty Rationalization
Tracking System
Reflector Glass
Recervier Tubes
Solar Turbines
Vacuum Tubes

44
Table 10: Prioritizing Solar manufacturing support for Solar Photovoltaic
5. Promoting cluster R&D
Promotion of cluster R&D for improvements in cell efficiencies in solar PV value
chain and local alternatives development for solar thermal value chain should be
facilitated for near-term commercial applications. Short to medium term
research and development projects with industry partners should be promoted.
This will provide flawless transfer of technology from lab to commercial scale.
a. PV Cell Efficiencies - Incremental improvements from 16.4% and above to
ensure that the locally available options are at par with the global
benchmarks
b. PV Cell Consumables - substituting Silver paste with Copper or abundantly
available low cost materials; optimizing Silver paste quantities
c. Solar Thermal Value Chain - Low cost indigenous options for anti-reflective
coatings, absorber coatings, receiver tube coating, turbines, etc. to be
developed to reduce dependence on imports
d. Cost and efficiency improvement programs for storage devices such as
batteries, Inverters, etc.
Details Domestic Capacity Creation Duty Rationalization
PV Cells
Si Wafers
Ploysilicon
Low Iron Glass
EVA Sheets
Backsheet
Junction Boxes
Al Frames- anodized
Silver Paste
Graphite
Quartz Crucibles
SiCarbide slurry
MG Silicon
Reflective Coatings
Absorber Coatings
LED circuits/ Lamps

45
FICCI Solar Energy Task Force was launched in March 2010, with the launch of
Jawaharlal Nehru National Solar Mission (JNNSM) to provide a platform for the solar
energy sector to deliberate on policy and regulatory issues and advance interests of
the sector at domestic and global platforms. The Task Force is represented by 32
members from the entire value chain of the solar industry including manufacturers,
project developers, system integrators, EPC companies, raw material suppliers as
well as the certification agencies. Mr V Saibaba, CEO, Lanco Solar is the current
Chairman, and Mr Vivek Chaturvedi, CMO, Moser Baer Solar is the Co-Chairman of
the FICCI Solar Energy Task Force.
The Task Force has six Subgroups: Subgroups on on Solar Financing, Securing
Supply Chain, Creating Sustainable Demand, Off-grid and Decentralized Solar
Applications, Solar Thermal, and Performance Standards, comprising solar industry
stakeholders and chaired by industry leaders.
The members of the FICCI Solar Energy Task Force include the following:
Abengoa Solar India
ACME Telepower Limited
Allied Glasses Pvt. Ltd
Alstom Power
Applied Materials India Pvt. Ltd.
AREVA India
Astonfield Renewable Resources Limited
Bharat Heavy Electricals Ltd.
DSM India Private Limited
Emmvee Photovoltaic Power Pvt Ltd.
Grundfos Pumps India Pvt Ltd.
IL&FS Energy Development Company Ltd.
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15. About the FICCI
Solar Energy Task Force

46
Indian Oil Corporation Limited (IOCL)
Kiran Energy
Lanco Solar
Larsen & Toubro Limited
Maharishi Solar Technology (P) Ltd.
Mahindra Partners
Moser Baer Solar
NTPC Limited
OMC Power
Photon Energy Systems Ltd.
Solar Semiconductor Pvt. Ltd.
Solid Solar
Sunborne Energy
Suryachakra Power Corporation Limited
Tata Power Solar
Thermax Limited
Titan Energy Systems Ltd
TUV Rheinland
Underwriters Laboratories
Welspun Energy Limited
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16. Acknowledgements
We acknowledge the inputs provided for this paper by members of the FICCI Solar
Energy Task Force. In particular, we would like to acknowledge the tremendous work
put into developing this paper by the following:
Thermax Limited
Mr Deepak Thakur, Chair, FICCI Solar Subgroup on Securing Supply Chain
Mr Salil Dutt
Lanco Solar
Dr Gangadhar Rao, Co-Chair, FICCI Solar Subgroup on Securing Supply
Chain
Applied Materials
Mr Puneet Gupta
Mr Ashwini Aggarwal
FICCI
Ms Rita Roy Choudhury, Senior Director & Head - Environment, Climate
Change, & Renewable Energy
Mr Nirbhay Srivastava, Assistant Director
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